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I love dividends because they increase my private income. But I don’t like all dividends, only such payments with a sustainable and healthy growth. Recently, I published a list of 10 stocks with not sustainable dividends. It‘s important to find stocks with good yields and adequate returns on equity in order to ensure that the company is creating value beyond the dividend payment. Further, both ratios can show whether a company has sustainable growth.

I screened some high-yielding stocks with a dividend yield of more than 5 percent. In order to ensure that the company did not pay more than the earnings, the payout ratio should be under 100 percent. In addition, the company should create values for investors. That’s the reason why the return on equity should be over 20 percent. Finally, only a growing business is a good business and the sustainable growth rate should have a rate of more than 5 percent. Here are my three most promising stocks:

1. Altria Group (MO) is acting within the cigarettes industry. The company has a market capitalization of $54.1 billion, generates revenue in an amount of $23.9 billion and a net income of $3.4 billion. Its P/E ratio is 15.8 and forward price-to-earnings ratio 11.2, Price/Sales 2.3 and Price/Book ratio 11.7. Dividend Yield: 6.3 percent. The Return on equity amounts to 74.8 percent and the payout ratio is 92.8 percent. Finally, the company’s sustainable growth amounts to 5.4 percent.

2. AstraZeneca (AZN) is acting within the major drug manufacturing industry. The company has a market capitalization of $59.0 billion, generates revenue in an amount of $33.0 billion and a net income of $8.2 billion. Its P/E ratio is 7.7 and forward price- to-earnings ratio 7.4, Price/Sales 1.8 and Price/Book ratio 2.7. Dividend Yield: 6.1 percent. The Return on equity amounts to 38.0 percent and the payout ratio is 44.2 percent. Finally, the company’s sustainable growth amounts to 21.2 percent.

3. National Grid (NGG) is acting within the gas utilities industry. The company has a market capitalization of $34.9 billion, generates revenue in an amount of $22.0 billion and a net income of $3.3 billion. Its P/E ratio is 10.1 and forward price-to-earnings ratio 11.6, Price/Sales 1.6 and Price/Book ratio 2.4. Dividend Yield: 6.0 percent. The Return on equity amounts to 32.6 percent and the payout ratio is 49.3 percent. Finally, the company’s sustainable growth amounts to 16.5 percent.

Disclosure: I am long MO.

Source: 3 Best High-Yield Stocks With Sustainable Growth